Solution-What is the maximum contribution margin

What is the maximum contribution margin

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Reference no: EM133201851

Produces Products a5, b8, and c9. The following table provides per unit information relating to the three products:

	Product
	a5	b8	c9
Selling price	$ 88.00	$ 72.00	$ 78.00
Variable expenses:
Direct materials	26.40	18.00	9.00
Other variable expenses	26.40	36.00	45.60
Total variable expenses	52.80	54.00	54.60
Contribution margin	$ 35.20	$ 18.00	$ 23.40
Contribution margin ratio	40%	25%	30%

The company has enough demand to sell 900 units of each product per month. Each product requires the same direct materials in its production. The direct materials cost $3 per pound. The company will at most have 6,000 pounds of the direct materials available every month.

What is the maximum contribution margin can earn per month using its 6,000 pounds of direct materials optimally?

Reference no: EM133201851

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What is the maximum contribution margin

Reference no: EM133201851

Reference no: EM133201851

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